Overview
- Freddie Mac reported the 30-year fixed mortgage average rose to about 6.58% this week while the Mortgage Bankers Association’s contract rate reached about 6.69% for the week ended July 17, with private trackers showing rates in the upper-6% range.
- Market participants said renewed U.S.-Israel/Iran hostilities lifted oil prices, which raised inflation expectations and pushed the 10-year Treasury yield higher, and those rising Treasury yields are the main driver of higher mortgage pricing.
- Lenders in both the U.S. and U.K. have moved quickly to reprice fixed products, with at least 25 lenders raising selected rates in recent days and major British banks such as Santander, Barclays and HSBC reported among those increasing offers.
- Despite higher borrowing costs, mortgage application activity ticked up modestly, with the MBA reporting a 1.9% overall increase and a 6% rise in the seasonally adjusted purchase index for the week ended July 17 as more inventory and price cuts drew some buyers back.
- Looking ahead, markets and borrowers are watching the Federal Reserve’s July 29 meeting for guidance on policy and inflation, and higher long-term yields could keep affordability pressured, prompting more buyers to shop lenders, consider different loan structures, or delay purchases.